What are APMs (Alternative Payment Methods)?
APMs (Alternative Payment Methods) are payment solutions that extend beyond traditional cash and major credit card networks like Visa, Mastercard and American Express. These methods include digital wallets, bank transfers, prepaid cards, Buy Now Pay Later services, cryptocurrencies and mobile payment platforms. APMs have shifted from niche options to mainstream payment channels, with digital wallets alone driving 50 percent of global ecommerce transactions in 2023.
For financial institutions offering lending products, APMs represent a significant opportunity to meet borrowers at the point of need and improve conversion rates across digital and embedded lending channels.
How do APMs integrate with embedded lending platforms?
APMs enable seamless financing experiences by allowing lenders to deliver credit options directly within merchant checkout flows and third-party platforms. When integrated with embedded lending infrastructure, APMs remove friction from the borrowing process. For example, a customer can select a BNPL option at checkout, receive instant approval through automated decisioning, and complete the purchase without leaving the merchant environment. This integration requires robust orchestration capabilities that connect payment gateways, fraud detection systems, and loan origination platforms. Banks that implement APMs within their embedded lending programs typically see improved approval rates and higher average order values for their merchant partners. The combination of flexible payment options and contextual lending creates a more competitive offering for financial institutions seeking to expand their lending footprint beyond traditional banking channels.
What drives APM adoption in B2B and B2C lending?
APM adoption in lending markets is accelerating due to several converging factors. Consumer expectations have fundamentally shifted toward instant, frictionless financing options that match the speed of modern commerce. In 2025, nearly 70 percent of ecommerce transactions are expected to flow through alternative payment methods. B2C lending has led this transformation, with BNPL accounting for a growing share of retail transactions. Germany saw BNPL surpass credit card usage for online shopping, reaching 20 percent of ecommerce transactions in 2024. The B2B sector is following closely behind, with B2B BNPL payments expected to reach $199.2 billion in 2024, growing at an annual rate of 33.4 percent. Businesses now expect the same seamless financing access they experience in personal transactions. Financial institutions face mounting pressure to support APMs or risk losing market share to more agile fintech competitors that have made these payment options standard offerings.
What challenges do banks face when implementing APMs?
Banks implementing APMs encounter several operational and strategic hurdles. Integration complexity ranks among the most significant challenges, as legacy core banking systems were not designed to support the real-time data exchange and instant settlement requirements of modern payment methods. Many institutions struggle to connect APM providers with existing loan origination and servicing platforms without extensive custom development. Transaction cost optimization presents another consideration, as different APMs carry varying fee structures that impact profitability. Security and compliance requirements multiply when supporting multiple payment channels, each with distinct fraud patterns and regulatory obligations. Banks must also navigate the customer experience challenge of offering choice without creating confusion. According to recent surveys, more than 85 percent of US merchants plan to accept new APMs within the next three years, creating urgency for financial institutions to solve these implementation challenges. Successful APM integration requires modular lending technology that can orchestrate multiple payment methods through a unified platform while maintaining regulatory compliance and operational efficiency.
How will APMs and embedded finance reshape lending in 2026?
The convergence of APMs and embedded finance is fundamentally restructuring how banks deliver lending products. The embedded finance market reached $85.8 billion in 2025 and projects to hit $370.9 billion by 2035, representing a 15.8 percent compound annual growth rate. Financial institutions are moving beyond standalone lending products toward integrated solutions that meet borrowers contextually at the point of purchase. Digital wallets now serve as primary access points for financing, with platforms like Apple Pay and Google Pay processing billions in transactions monthly. Venmo processed $81.98 billion in Q2 2025, showing 11.9 percent year-over-year growth. These platforms are evolving from simple payment tools into comprehensive financial ecosystems that include embedded lending capabilities. Banks that successfully integrate APMs into their lending strategies gain access to new customer acquisition channels and improved conversion metrics. The institutions that fail to adapt risk becoming invisible to consumers who increasingly expect financing options to be seamlessly woven into their commerce experiences across all digital touchpoints.
How does Jifiti enable APM integration for bank lending programs?
Jifiti provides financial institutions with a white-labeled, modular lending platform that simplifies APM integration across embedded and direct digital lending channels. The platform’s comprehensive orchestration layer connects banks to multiple payment methods through a single integration, eliminating the technical complexity of managing individual APM relationships. Banks can deploy their traditional lending products via digital wallets, and offer flexible financing options such as BNPL and other alternative payment methods without rebuilding their core infrastructure. This modular approach allows institutions to select specific components needed for their lending strategy while maintaining full control over underwriting, compliance, and customer relationships. Jifiti’s disbursement capabilities enable omnichannel deployment, supporting in-store, online, call center, and assisted sales environments through various settlement methods including virtual cards and direct settlement. Financial institutions using Jifiti’s platform can rapidly launch new lending products with integrated APM support, significantly reducing time to market while meeting the real-time expectations of modern borrowers across any customer touchpoint.
Key Takeaways
APMs have transitioned from alternative options to mainstream payment channels, with digital wallets and BNPL solutions driving significant transaction volume across consumer and business lending markets. Banks must integrate APMs into their embedded lending strategies to remain competitive as customer expectations shift toward instant, contextual financing experiences. Financial institutions implementing APM-enabled lending platforms can expand their market reach, improve conversion rates, and capture new revenue streams by meeting borrowers at the point of need across multiple digital channels. Modular lending technology that orchestrates multiple payment methods through unified platforms enables banks to deploy APM-integrated lending products without extensive core system replacements.
